C-Suite Retention During an Economic Downturn
In a down market, it might seem like the retention rate for top executive talent would improve or that an organization has less chance of losing top talent. In reality, market uncertainty combined with slowing business can create an unstable environment of risk, which can lead to the turnover of your top-performing talent.
Challenges Corporations Face in a Down Market
- Organizations reduce their workforce to maintain profitability or stem losses.
- CEOs focus intensely on results and can “take their eye off the ball” on talent development for top performers.
- Rumors of divestitures and other M&A activity increase.
- Leaders in all areas of the business prioritize achieving metrics in their respective areas of responsibility. This leads to sub-optimization of the overall business performance, promotes a lack of teamwork, hurts business culture, and is a source of frustration to your top talent.
- Bonuses and long-term incentive plans pay out minimally or not at all.
- Longer hours, additional pressure, and cuts in training budgets result in less employee satisfaction.
The talent market doesn’t hit pause during tough times. In fact, it’s quite the opposite – during economic downturns, executive search firms like ours often see a spike in activity. Why? Because our clients are still on the hunt for top-notch talent to help them stay ahead of the competition, in the more competitive down market.
Executive Search Firms Scout During Economic Shifts
Sometimes, when firms are looking to remain at the cutting edge, they take a closer look at their own teams and realize they’ve got some “dead wood” in key positions. They make the decision to let go of underperformers and bring in top talent from elsewhere, maybe even from your organization – and top executives know this. It is never safe to assume your top talent isn’t being courted in a down market because they most certainly are.
Top performers, whether they are currently C-suite executives or shining stars in other parts of an organization, have big plans for their futures and are all about growth. They are the kind of people who can’t sit still in their careers. In the world of executive search, our job is to scout the cream of the crop: the top 20% of performers in target organizations. That’s our bread and butter.
In contacting these talented individuals, the most eager responses come from those who don’t see a clear path to advancement in their current organization. That’s where the risk to your business comes in. When approaching a prospect, we come prepared with a solid, enticing job profile and clear roadmap for future advancement, and your best employees will be curious to know more.
Retaining Your Top Executive Talent
Therefore, to retain executives and other top talent in an economic downturn, we recommend starting by identifying the top 20% of performers in key areas of your business – think sales, finance, operations, HR, marketing, and more. These high achievers typically generate 80% of the opportunities and drive 80% of performance improvements. Spot these stars, and don’t make the mistake of putting their development on the back burner during a downturn, no matter how hectic things get.
Take the time to sit down with your top performers, either one-on-one or with your executive team. Chat about their future and how your organization can support their growth. Have a concrete plan, not just vague promises. Get specific – talk about opportunities for new skills or higher-level responsibilities and include timelines whenever possible. For example, if you have a top performer gearing up to head your supply chain, lay out the steps and timing to help prepare them. If you’re planning for a future executive retirement, spell out when that high achiever will step into the role, always contingent on continued outstanding performance.
Ultimately, if your top performers see a clear development plan and career path within your organization, they won’t need to entertain outside offers from us executive search professionals.